THE DOT - if this turns orange or red be alert

Monday, February 28, 2011

We are clearly in this trading channel and have recently challenged the resistance level and testing the imminent uptrend since Aug. last week. It still survived the first attack but should try once again even this but more likely next week with a positive drop below. The Apple recovery is one of the factors plus the month end window dressing but even more so the return of the retail investors to the stock-markets this year. We have a weekly Golden Cross in the DOW and about to in the SPX which ironically is most of the time an indicator for an imminent counter-move of at least 5%.. We have a little time window of 2-3 days where Venus will be in a benign sextile to Uranus while it moves into a new sign (Aquarius) which is again a perfect timing of Apple to launch a new product ( might not be a coincidence at all) which could drive Apple stocks to the 360 levels once again.SPX could test the 1350 level before turning down within this context as we now enter month 7 count with a 13 which means that the top could take a few more weeks to be finished. but with a 10% correction in between as the bigger tops have this wild distribution patterns. As the FED and the other banksters keep the ponzi-rally going with an unprecedented liquidity infusion some indicators seem to be irrelevant but its rather more a matter of delay and rather worse outcome.

1. Was a bit premature to say that the uptrend was broken for the SPX as we challenged it for 2 days but managed to turn around at the 1300 support. Well as you will say later today this volatile top is going t be a little more tricky as Apple messes around again to the upside with IPAD 2 being announced on Wednesday - it closed the gap and trades above 350 again. Where is a chance for new highs in case of Apple anyway even the Tech indices may make minor new highs this week - more on that ay the index updates.

The FED creates the ultimate bubble and if they do not follow up with QE3 markets will crash anyway but even if they come with another round if inflating markets a Dollar crash might harm stocks as well as the FED digs America into its own grave and another round of Ponzi scam might be to much of poison. Right now they seem to have succeeded anyway as retail rushes in to buy all those bubbly stocks and the rate of change for Apple products will not produce more buyers as no one can refresh his gadget on a yearly basis but Apple can still steal a bit more from classic PC consumers but that is already priced in around 360.

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MONDAY, FEBRUARY 28, 2011

INVESTOR SENTIMENT READINGS

High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

Last Week

2 Weeks Ago.

3 Weeks Ago

Consensus Index

Consensus Bullish Sentiment

75%

74%

71%

Source: Consensus Inc., P.O. Box 520526,Independence, Mo.

Historical data available at (800) 383-1441. editor@consensus-inc.com

AAII Index

Bullish

36.6%

46.6%

49.4%

Bearish

36.1

25.6

26.9

Neutral

27.2

27.9

23.7

Source: American Association of Individual Investors,

625 N. Michigan Ave., Chicago, Ill. 60611 (312) 280-0170.

Market Vane

Bullish Consensus

64%

67%

67%

Source: Market Vane, P.O. Box 90490,

Pasadena, CA 91109 (626) 395-7436.

FC Market Sentiment

Indicator

57.3%

57.3%

57.0%

Source: First Coverage 260 Franklin St., Suite 900

Boston, MA 02110-3112 (617) 303-0180. info@firstcoverage.com

FC Market Sentiment is a proprietary indicator derived from actionable sell-side trade ideas sent by the sell-side to their buy-side clients over the First Coverage platform. Over 1,000 institutional sales people at more than 250 firms participate on the First Coverage platform and have contributed hundreds of thousands of ideas since inception. Each Idea is associated with a ticker or sector and is tagged bullish or bearish by the creator. This data is aggregated at the sector, industry and market level. The FC Market Sentiment score ranges from 0-100 (0=most bearish, 50=neutral, and 100=most bullish) and represents a completely objective, real-time view into what advice the sell-side is providing to their buy-side clients

Citigroup Panic/Euphoria Model

2. Besides volatility with now get SKEW from the CBOE which is a very good indicator combined with VIX.

We have now reached the same setup as in late April 2010 before the Flash Crash and correction.

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It's A Skewed, Skewed World

CBOEs recent introduction of the SKEW Index brings the realities of the options market (and real fear indexes) to retail investor's eyes. With so much attention paid to the VIX (the anachronsitic FEAR index) and especially its dropping over the last few months, investors are led to believe that risk is reducing but lo and behold, as many Pros know, the cost of protecting against a much more serious drop (or tail event) has increased quite notably with out-of-the-money options vols rising notably. The chart below shows this quite clearly as VIX (At-the-money vol) ebbs away (red arrows) as the day-to-day vol of more 'normal' mark-to-market movements is culled thanks to the liquidity fueled effervescence, the rise in out of the money (or crisis/event risk) vol has risen dramatically (white arrows). This can only go on so long as vol arbitrageurs will creep up the moneyness curve (to hedge the tail risk) and eventually impact the ATM. This happened in early 2010 and is happening again currently.

The recent moves in the major credit indices also fits with this world view as any smarter-than-the-average bear capital structure arbitrageur knows that the skew (and specifically the out of the money vol market) has a much better relationship with credit than the near-the-money. One other potential way to think of this (hattip to Artemis recent article on this) is that the skew better represents the real market value of the Bernanke Put (i.e. how much is the market pricing in the never-ending story of a Fed-provided safety net) - perhaps notable that the SKEW began to rise very shortly after Jackson Hole and the QE2 plan came online.

Friday, February 25, 2011

1. Another indicator for a top is that the banksters succeeded in convincing retailers to jump on the bull campaign at the tops as the fund flows below show. We have a serious inflow in domestic stock funds the last weeks , which is a U-Turn to last years where we had constant outflows. That is exactly what Bernie boy is aiming for so his bankster friends at Goldman and JPM can dump it on Mainstreet what they were carrying all the way to the top. This is capitulation as they were sick and tired earning no interest but watching markets go up they do the exactly wrong thing now while brokers have a party as the money goes from money market funds to front-loaded equity funds must likely.

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Long-Term Mutual Fund Flows
February 16, 2011

Washington, DC, February 16, 2011 - Total estimated inflows to long-term mutual funds were $9.30 billion for the week ended Wednesday, February9, the Investment Company Institute reported today. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Estimated Flows to Long-Term Mutual FundsMillions of dollars

1/12/2011

1/19/2011

1/26/2011

2/2/2011

2/9/2011

Total Equity

6,533

4,959

5,111

1,760

5,849

Domestic

3,762

3,311

3,242

1,414

4,921

Foreign

2,772

1,649

1,869

346

928

Hybrid

2,140

1,556

1,941

1,662

1,885

Total Bond

-975

-2,165

742

577

1,561

Taxable

1,393

3,584

3,447

1,749

3,027

Municipal

-2,368

-5,748

-2,704

-1,173

-1,466

Total

7,698

4,350

7,794

3,998

9,295

Equity funds had estimated inflows of $5.85 billion for the week, compared to estimated inflows of $1.76 billion in the previous week. Domestic equity funds had estimated inflows of $4.92 billion, while estimated inflows to foreign equity funds were $928 million.

Hybrid funds, which can invest in stocks and fixed income securities, had estimated inflows of $1.89 billion for the week, compared to estimated inflows of $1.66 billion in the previous week.

2. I also checked Gaddafi's astro chart and he is in for some serious distress as Uranus challenges some crucial natal positions but at the same time he has also benign patterns. Which leads me to the conclusion he will be able to hold out for a bit ( like weeks) before more dramatic patterns are triggered. That could last til June actually that he keeps his power but serious turmoil is indicated for now anyhow. As Mars is square his natal Uranus Saturn conjunction right now for a few more days if he stays in power the next days riding out the imminent aggression against him will be able to stay for a couple more weeks at least.

On the other hand I have a strong impression that the powers behind the scenes do not have a real interest to solve the situation as they do benefit from higher oil prices and they want to spread the revolution to more places probably even to Saudi Arabia.

Thursday, February 24, 2011

It is save to say now that we broke the uptrend for the SPX and as the chart tells we have quite some downside within the bigger uptrend channel which is still a correction but a steep one as our target is now the 1125-75 bigger price window within the next months. The tricky part though is that being still in month 6 within a bigger 9 count we could still be within a distribution pattern for the next weeks but right now it looks like wave 5 of 5 is done. The next days the downside will resume though a small bounce is possible on Monday depending on the Libya drama. Today is a day 3 count and bounces happen around 5/6 but also in price terms we first should hit the 1275/80 level before a bounce is likely. Escalation is possible well into next week as the Full Moon has exactly marked the top the initial wave down should last another week. Plus a big potential for panic liquidations

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Surges - Total Free Cash Lowest Since July 2007, Just Prior To Quant Wipe Out

The NYSE has released its January margin debt data. Not surprisingly, total margin debt hit a peak of $290 billion, the highest since September 2008, but the one category that shows just how much purchasing is occurring on margin is total Free Credit less Total Margin Debt drops to the lowest since the all time credit bubble peak in July of 2007! At ($45.9 billion) this number is just below the ($52.8) billion last seen just before the August 2007 quant wipe out which blew up Goldman's quant desk, and arguably was the catalyst for the beginning of the end. In other words, as we have shown, everyone is now purchasing on margin and the level of investor net worth is the lowest in over 3 years. Which means that should the market decline from this week persist and the Fed be unable to stop it, the margin calls will start coming in fast and furious, and unwinds in otherwise stable products like gold and silver are increasingly possible as hedge funds proceed to outright liquidations.

1.The Spy game but not the Hollywood version - Jack Bauer meets Darth Vader mix agent confirmed by USA officaly as he was caught after killing 2 Pakistan agents. accusations that the CIA contractor was recruiting Taliban which the US government claims to fight against and more so delivering with nuke and bio-weapon technology makes the whole Afganistan war to the farce it is. 100k US soldiers plus allies and plenty of expensive Blackwater contractors hunting 5k Taliban they did recruite and train themselves so they can kill US troops that ia how weird politics is these days - only confusing if you do not have the NWO at heart.On the other hand it is no secret that the Pakistan military is supporting the Taliban themselves they are supposed to fight that makes a very perverse mix from double interests and would make a great movie if it were not all evil. Making conspiracy theories less theoretical by all means as Soros funds almost all the organisations who are responsible for the current revolts and shake up of dictators in the middle east which drove oil prices higher owned by the same Rothschild/Rockefeller gang who will have made a killing the last 2 weeks.

CIA Agent Caught Red-Handed Aiding Pakistani Terrorism?

News that the American accused of killing two Pakistani men is a CIA contractor has intensified an already highly charged situation in Pakistan.

"Raymond Davis is a CIA Guy," read the headline in the Daily Times newspaper Tuesday.

***

Davis was jailed January 27 after fatally shooting two men who pulled up to him on a motorcycle in a bustling Lahore neighborhood.

***

The 36-year-old Davis is a former member of the U.S. Army special forces and had been employed by security firm XE Services, previously known as Blackwater.

Davis began working for the CIA nearly four years ago. He was assigned to Pakistan in late 2009. He was living with other security personnel at a safehouse in Lahore before the shooting incident.

On Monday, a U.S. government official also said that Davis was a CIA contractor providing security for CIA officers.

The U.S. at first falsely claimed that Davis was a diplomat with the State Department and should therefore be granted diplomatic immunity:

Despite the revelation of Davis' true line of work, U.S. officials on Monday renewed their argument that he has diplomatic immunity and must be released.

***

Before Monday, U.S. officials had described Davis only as an employee who was attached to the U.S. Embassy in Islamabad and who was working at the U.S. Consulate in Lahore at the time of the shootings.

But the deeper story is that Davis allegedly actively aided and abetted terrorism. As CNN notes:

Some newspapers cited unnamed sources to link Davis with "terrorist activity" and the Pakistani Taliban.

"CIA agent Davis had ties with local militants," read the headline in The Express Tribune.

"His close ties with the TTP (The Pakistani Taliban) were revealed during the investigations," the paper quoted the police official as saying. "Davis was instrumental in recruiting young people from Punjab for the Taliban to fuel the insurgency."

In a story published Tuesday, the English-language Express Tribune quoted a Punjabi police official who said Davis was actually working with the Pakistani Taliban in a bid to stoke insecurity in Pakistan and support the argument that its cache of nuclear weapons isn’t safe.

Call records of Davis’s cellphone allegedly establish his link to 27 Taliban militants and a sectarian group known as Lashkar-e-Jhangvi, the police source said.

Reuters points out that two other CIA contractors were involved in a fatal car accident last month while trying to help Davis. Reuters notes, and have now quickly departed from Pakistan, and notes:

Two U.S. officials confirmed media reports the two men involved in the fatal accident were working and living in the same building in Lahore as Davis. They said all three men were working on similar security assignments for the CIA.

Most dramatically, South Asian news agency ANI reports that - according to Russia's Foreign Intelligence Service - Davis was giving nuclear and biowarfare materials to Al-Qaeda:

Double murder-accused US official Raymond Davis has been found in possession of top-secret CIA documents, which point to him or the feared American Task Force 373 (TF373) operating in the region, providing Al-Qaeda terrorists with "nuclear fissile material" and "biological agents," according to a report.

Russia's Foreign Intelligence Service (SVR) is warning that the situation on the sub-continent has turned "grave" as it appears that open warfare is about to break out betweenPakistan and the United States, The European Union Times reports.

The SVR warned in its report that the apprehension of 36-year-old Davis, who shot dead two Pakistani men in Lahorelast month, had fuelled this crisis.

According to the report, the combat skills exhibited by Davis, along with documentation taken from him after his arrest, prove that he is a member of US' TF373 black operations unit currently operating in the Afghan War Theatre and Pakistan's tribal areas, the paper said.

While the US insists that Davis is one of their diplomats, and the two men he killed were robbers, Pakistan says that the duo were ISI agents sent to follow him after it was discovered that he had been making contact with al Qaeda, after his cell phone was tracked to the Waziristan tribal area borderingAfghanistan, the paper said.

The most ominous point in this SVR report is "Pakistan's ISI stating that top-secret CIA documents found in Davis's possession point to his, and/or TF373, providing to al Qaeda terrorists "nuclear fissile material" and "biological agents", which they claim are to be used against the United States itself in order to ignite an all-out war in order to re-establish the West's hegemony over a Global economy that is warned is just months away from collapse," the paper added.

However, ANI's allegations are uncorroborated at this time, and it is unknown whether Russia's Foreign Intelligence Service said anything of the sort.

2. Rather more depression when anything else despite Geithner claim things are better probably he always thinks of Wallstreet speaking of Mainstreet since the boss of the IRS also had some trouble delivering correct tax statements despite a briefing from the IMF. Still with commodities at record levels and still no official inflation some more miracles of the Harvard breeded bankster stats may show up to prove that the emperor is still not naked.. Zero interst rates around the world produce equity bubbles which will ultimately solve the jobless situation as the next global war will bring people back to work even if it happens to be in uniforms chasing evil terrorists the CIA has produced. That will ultimately solve the pension fund short comings as the collateral damage will reduce the number of receipients and the Rothschild boys will deliver the weapons - everything ends well ... just not for Mainstreet again.

While the quant funds are desperately seeking modelers for a "deranged middle east dictator" algo, the US economy continues to prolapse. From the release: "Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000. The median sales price of new houses sold in January 2011 was $230,600; the average sales price was $260,300. The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. This represents a supply of 7.9 months at the current sales rate." Less than 500 homes (Z) sold in the over $750,000. And the stunner: only 19k non-annualized homes were sold. The lowest monthly total ever. (and as JT Smith points out, of the 19K, 53% were vacant lots or under construction).